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Real Estate is a Referral Business

Real Estate is a Referral Business

When you think about real estate, most of us don't think about how important referrals are. We refer friends and family every day to different things that we try. Whether it's a new makeup, a great restaurant, a recipe, or a hairdresser, we're constantly referring our friends and family to people or places that we've had a great experience with. The same thing is true in your real estate business. If you worked with a real estate agent who made the entire home buying process super smooth and explained everything to you step-by-step, you are more than likely going to want to refer them to your friends and family. Everyone in business is looking to get the biggest return on their investment and they want to work with people who work as hard as they do and care about maximizing their time.

Let's talk about a few things that as an agent/investor you can do to give people the best experience so that they will want to refer you to all their friends and family. Referrals are free and yet they are the best form of advertising out there. If you're an agent, of course your goal is to close the deal, make your customer happy, and sell their home, but remember this is a people business. People like to work with other people who treat them with respect and who are honest. Not every contract you get may be a sale, some might decide to refinance or take a different route, but by treating people with respect you will have opened the door for a referral.

Listen to what your client is wanting. If they're looking to sell their home this can be a very stressful time as it's a transition for them. For some homeowners this may be the first time that they've gone through this process. Make sure to answer all the questions, be prompt in your response time, remember you've been through this process many times but for them it might be their first. There are a lot of programs out there to help realtors go into the transaction knowing exactly what the client is looking for.

For example, maybe the person looking to sell has had a death in the family and they are wanting to sell a home that has been a cherished place in their family’s history. Always keep the lines of communication open. Check in with your clients often to make sure they don't feel like they're getting lost in the shuffle. Be deliberate about the way you run your business, document your transactions, and ask your clients if you can share your statement with future clients. After a sale it's a nice gesture to send a thank you card or a small gift. It shows care, thoughtfulness, and appreciation. People just like to be respected and they like to know that they are appreciated.

New agents are usually so eager to get clientele that they would bend over backwards and do anything they could, as they wanted to make a good impression. However, I noticed with several of them that overtime they weren't too worried about getting clients or being referred. You could call them multiple times and never get a call back. Remember this is a people business. Little things like a phone call, a text message, email, or a thank you note go a long way in your referral business. If people like you, they want to talk to you but if they trust you, they want to do business with you. Be respectful to what their needs are. Each client is different and looking for something different. What's important to one client might not be important to another.

Remember, real estate agents are a dime a dozen. Think about what makes you different from the rest. If you're looking to build your network or you're just starting out, go to networking meetings, or join your local chamber of commerce, they host business lunches. Surround yourself with other business owners who are exposed to other customers and connect with them. Just don't be that guy that goes to a networking event and walks around the entire room passing out a business card to every single person. Remember, agents are a dime a dozen, just passing out business cards isn't enough. What's going to make someone choose you over the next guy. Rub shoulders with people that have the same interests as you. For instance, if you go to Bible study, some folks might feel more comfortable working with someone that shares the same faith. Perhaps you have some girlfriends who would prefer to work with a female agent or vice versa. Remember to talk to people everywhere to find out what they're looking for. It could be your child's teacher or at a doctor’s office. People like doing business with people that have the same mindset, so surround yourself with good people that have the same interests as you.

Consider hosting an event. It's a perfect opportunity to meet new people and find out what they're looking for, and to acquire new contacts. There are also referral agents that are licensed and that know the legal requirements necessary to purchase a property, they connect homeowners with agents who are vetted. They do the due diligence for you. They also refer agents who screen homebuyers and only give you quality referrals. Remember the referral agent does collect a fee for this, it is part of the agent's commission. This is a great way to get your foot in the door. Be confident in what you do but think about what makes you different than all the other agents out there. If you’re an investor and an agent this is a benefit to other investors as most agents don’t understand what investors do as an agent. They want to make the biggest commission and sell a house for the highest price. As an investor we are looking to buy a house for the lowest possible price, so two very different mindsets. When I found an agent that understood this, I told him I’m going to buy at least 5 houses this year and I want you to be my only agent, he agreed to take a lesser commission due to the fact that he was my go-to guy for all my deals.

Don’t be afraid to think outside the box and do things differently than others, people are looking for genuine honest reliable people like you!!

Areas of Review

Big picture takeaway points

Big picture takeaway points

  1. Referrals are everything in this business, talk to people and find out what they are looking to get out of the deal.
  2. Keep contact info and build a list you may not be buying from now but may be able to use them or help them down the road.
  3. If people like you they will want to do business with you. Remember if you give them a great experience, they will tell everyone they know about you.


Self-reflection questions to think more about the content

  1. Do I have ways to generate leads? Host and event at your local chamber or find a referral agent.
  2. Does everyone know that I am a real-estate investor?
  3. Does my power team know what I’m trying to accomplish?

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